These are historic times for our country. The biggest economic crisis since the 1930s is generating new political alliances. The task for Labour is to define, shift and then occupy a new centre ground in British politics.

The era of Blair and Brown is over. We must shun a factional and sectional politics built on toxic relationships and mistrust. Ours is a great movement with great traditions and we must honour them once more – through a fundamental rethink of our ideas, our organisation and our electoral strategy.

On ideas, we must move beyond both a statist social democracy whose time has passed, and a timid accommodation to the market that leads to tinkering not real change. In government we were too hands-off with the market and too hands-on with the state. Our weakness in political economy left the welfare state with too much work to do. We need a broader agenda to reshape the market, democratise the state and rebuild the bonds of community.

On economic policy we face major challenges: a shift in power from west to east; the structural weaknesses left by the unnecessary cruelty of Thatcherism; reducing the deficit while promoting jobs and growth. We need an industrial policy that makes government the ally of wealth creation. Private sector reform in the name of justice and efficiency; like giving employees a voice in decisions at work. A living wage so that no one who works hard ends up poor. And a banking system that spreads capital to new businesses across the country.

We let the Tories claim our language and traditions in their one-sided "big society", while allowing ourselves to be pigeonholed as defenders of the "big state". Labour stands for a state that redistributes power and increases people's security. We want a revived local government to meet the need for decent housing and protection against fear and antisocial behaviour. We seek a welfare covenant that protects better and demands more in return: a decent pension for everyone who pays in; a job guarantee to prevent long-term unemployment.

But new ideas alone won't be enough. We need to change the culture of our politics. Honest debate and differing opinions are the basis of democracy. There are many things we do not agree on, but we share a fundamental Labour creed: a commitment to democracy and liberty, and an economy that enables people to live decent, dignified lives.

We must return Labour to its roots as a movement for mutual self-improvement in neighbourhoods across the country. We need a new electoral strategy, too. Labels such as "core vote" and "middle England" are now largely meaningless. Since 1997 we lost support right across society: 1.6 million lower-income voters and 2.8 million middle-income voters. We need a broad appeal based on principle, not polling – rooted in the lives and experiences of the people. We combine radicalism and credibility by inspiring people with a sense of hope, while taking them with us as partners in a shared adventure.

This new agenda – ideological, organisational and electoral – is more challenging than simply junking unpopular policies or seeking a new tactical patchwork of voters. It confronts us with more uncomfortable truths. But it is essential. Our relationship with the British people has been ruptured, and we need to rebuild it. We need to talk to peoples' concerns about debt, housing, violence and wages. We need to renew the Labour covenant with the people based upon our shared fate and shared responsibility for each other. That is the way we will renew our party and, in time, change our country.